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The transaction was structured as an asset purchase and was subject to the OCC's prior approval under the Bank Merger Act, 12 U.S.C. § 1828(c)(2). The Bank Merger Act required OCC to consider six factors:

the antitrust implications of the proposed transaction;

the managerial and financial resources, and the future prospects of CONA and COBNA;

the impact on convenience and needs of the community;

the risk to the stability of the U.S. banking or financial system resulting from the transaction;

COBNA's and CONA's effectiveness in combating money laundering; and

whether the transaction would cause COBNA or CONA to control more than ten percent of insured deposits in the U.S.

In addition, the Community Reinvestment Act (CRA), 12 U.S.C. § 2903(a)(2), required OCC to consider COBNA's and CONA's record of meeting the credit needs of their communities.

OCC's Findings and Conclusions

OCC quickly disposed of the first six factors by providing summary conclusions for each. In some instances, such as the banks' compliance with anti-money laundering requirements, OCC's analysis was limited to a simple statement that there were "no material weaknesses . . . that would preclude approval of this transaction." Its systemic risk analysis was an abbreviated version of the analysis used by the Board of Governors of the Federal Reserve System (FRB) in its recent approval of Capital One Financial's acquisition of ING Bank, fsb. OCC devoted most of its approval to discussing the more controversial issue—the banks' CRA performance and compliance with consumer protection laws. It spent only about two and a half pages addressing the first six factors, while CRA and compliance issues consumed nearly 14 pages. In response to the proposed transaction, OCC received approximately 300 comment letters from the public regarding the banks' record of meeting the credit needs of their communities under the CRA. According to the OCC, commenters questioned the banks' performance in five areas: (i) mortgage lending to low- and moderate-income (LMI) borrowers and in LMI communities, (ii) small business lending, (iii) community development activities, (iv) branch office locations, and (v) compliance with fair lending and consumer protection laws. OCC largely dismissed these concerns. For the first four categories, OCC relied on the results of the banks' recent CRA examinations in which COBNAreceived a Satisfactory rating (the second highest) and CONA received an Outstanding rating (the highest). For the fifth category, OCC acknowledged that CONA's predecessor bank had been cited for fair lending violations and that COBNA had violated disclosure requirements from 2004 to 2010 in connection with a "specific add-on product" (no further details were provided in either the approval letter or COBNA's CRA performance evaluation). OCC also recognized that Capital One recently settled consumer protection claims with the State of West Virginia related to their credit protection products and that the U.S. Department of Housing and Urban Development was investigating claims that CONA violated fair lending laws by using an illegal credit score cutoff for government guaranteed mortgages. Despite these issues, OCC found that the banks' compliance systems were sufficient and allowed the transaction to proceed.

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